Tackling New York’s high cost of auto insurance

City & State’s New York Car Insurance Affordability Crisis, presented in partnership with Citizens for Affordable Rates at Lower Manhattan’s Museum of Jewish Heritage, convened policymakers, consumer advocates, industry experts, and community leaders seeking roads towards fixing the state’s car insurance system. 

City & State’s editor in chief Ralph R. Ortega opened the Oct. 29 event, which was dedicated to ensuring that insurance should be, what he called, “fair, transparent, and affordable.” 

Kathy Wylde, president and chief executive at the Partnership for New York City, served as the event’s keynote speaker, fielding an array of questions on topics ranging from affordability as a widespread public concern, auto insurance fraud, and even interstate differences.  Wylde did not shy away from acknowledging that affordability and addressing cost of living is the single most important issue to New Yorkers right now, coloring much of the campaign promises in what was then the final stretch of the now-decided mayoral election. 

Despite the persistent issue, so far in New York, “the only solution [has been] government spending more money. Spending more public dollars to solve cost problems just increases the problems,” she said.

Additionally, the costs of litigation and auto insurance are shocking in comparison to the rest of the nation, with New York paying a whopping 15% more on litigation fees, while coughing up a staggering 52% more for auto insurance compared to other states.

“[From 2014-2024], the cost of litigation has been estimated to have gone up 57% for one reason: there is now third party funding that is legal. Private equity funds are lending money to plaintiffs or law firms to carry out litigation and then, taking a piece of the proceeds. We are all paying for this,” she told attendees.

In regards to insurance, Wylde focused her criticisms toward the state’s no-fault car insurance law, mandating car insurance pay those involved in car accidents, no matter who was at fault. She noted that of all of the medical health fraud claims the Department of Financial Services receives, over 90% of them are no-fault insurance cases. And she said that 75% of all fraud complaints are now due to no-fault claims. Indeed, New York also leads the nation in size of nuclear awards, so not simply having a high proportion of these cases, but giving out the most money in the face of them. 

“No-fault gives them $50,000 for raising their hands,” she said. 

Wylde saw an example in other states as a means of mitigating this predicament. Using Florida as an example, she shared how the state capped jury awards, medical costs, and eliminated no-fault entirely. 

“In one year, their insurance premiums went down 6-10% and [the state’s] biggest insurance companies are rebating $1 billion [back to consumers],” she said, while also highlighting a similar playbook in Michigan where legal reform took place even sooner, scrapping no-fault and capping payment suffering awards. “Michigan said that there has to be observable injuries and not some abstract, ‘my back hurts.’”

There are “plenty of recipes” to lower costs, she reinforced. 

Wylde did urge the audience to not “isolate this issue and just pick on the insurance industry and litigators, this is across the board.”

She noted that “New York state has not paid enough attention to what's driving up costs,” coinciding with the separate, but relevant fact that, at the local level, “New York City, in the last decade, has become the most expensive city in America to live in or to do business in.”

According to Wylde, any path forward, “takes going into the weeds. It takes real guts and leadership by public officials who are going to challenge the status-quo. We’re not going to allow special interests to dictate [efforts at delivering on affordability]. Voters have made it clear in the primaries that’s what they want us to do.” 

The event also featured a roundtable discussion, with Brianna January, director of state and local government relations for the Northeast United States for the Chamber of Progress, Michel Léonard, chief economist and data scientist at the Insurance Information Institute, state Sen. James Skoufis and Assembly Member David Weprin, discussing avenues of private-public collaboration, what has been achieved, and what lies ahead. 

The discussion focused comprehensively on the difficulties of car ownership in New York City, the government-aided push to convert private drivers to public riders, the safety and regulation of e-bikes that now share the road with drivers, whether or not autonomous vehicles are a solution to human-induced road hazards, and other areas of note. 

Skoufis centered his remarks on affordability and equity, listing car insurance as the top concern for drivers, particularly those that feel overburdened by city rates compared to those just outside of the city, and those subject to higher rates due to some form of demographic background check. 

Commenting on the role of public transportation in alleviating car dependency and ways to generate revenue for those projects, congestion pricing being a major initiative mentioned, Skoufis pointed out the major “transit deserts” that exist outside of the city proper, how the MTA missed the mark, and how the initiative could’ve been more effective. 

Where city residents have more options to commute to their destinations, “Every single day, there’s a six hour window with zero trains heading out of Orange County south,” he said, emphasizing the fact that commuters that live outside of the city that need to get to Manhattan and face congestion pricing have no choice but to swallow that fee, even as access to public transit remains abysmal for their region. 

“We did this backwards in New York state,” he said. “What other cities like Stockholm did is they built out the access to public transit in the transit desert first before turning on the cameras, not what we did here in New York, which is, ‘Trust us, transit deserts. We’ll raise this money from congestion pricing and then, we’ll address your lack of access.’”

Weprin focused on the rising costs of premiums, as well as what contributes to them, such as the higher cost of parts due to federal tariffs. He encouraged people to shop around for different insurance policies and find a best fit and for the industry and legislators to better combat fraud.

As the main sponsor behind Alice’s Law, which made it a felony to stage a car accident, Weprin accused “schemers” of manipulating accidents and cases for financial gain. And it’s not always average people trying to make a quick buck.

“There are a number of law firms and doctors that re-show up on these accidents because there's a ring of the same people, and that should be a giveaway [for fraud],” Weprin said, reiterating the government’s action on combatting this practice.

January advocated for the integration of autonomous vehicles into New York’s car ecosystem, seeing them as a solution to human fault on the road, such as car accidents due to speeding or driving under the influence. Safety and regulation on the roads being a key pillar in the discussion surrounding insurance coverage, she sees AVs as a successor to the mandating of seatbelt usage in 1984, a present-day frontier for New York in regards to road safety. 

“A driver-less car doesn’t drink and drive, scroll and drive, [or] doze off at the wheel,” January said, also mentioning that AVs are equipped with G.P.S. and dash cams, also reducing the rate of fraudulent insurance claims. 

While fellow panelists agreed that autonomous vehicles had merit in some regards, Skoufis stressed that the key difference between 1984’s mandate and the implementation of autonomous vehicles is that the latter’s integration poses a direct threat to the city’s vast taxi system, potentially putting thousands out of work, unlike seatbelts. This, he explained, is largely why legislators have been hesitant on any approvals, though there has been progress and the door is open for further discussion.  

January addressed the expected pushback, framing autonomous vehicles as simply a new addition to the already-vast transportation ecosystem of New York. However, she felt as though “something [had] been left out of the conversation,” that something being proper investment in public transportation and infrastructure on part of the city and state that, in turn, reduces accidents and makes the city safer. She also questioned the perceived imbalance in reception between the implementation of seatbelts and the suspicions surrounding autonomous vehicles, further highlighting successes in other cities. 

“There was pushback to seatbelts, actually,” said Léonard, who remembered the public response more soberly, but does still support the innovation that autonomous vehicles present and their ability to help improve quality of driving. 

“[Data showed that] during COVID, we all started driving really fast and there was no one on the street. After COVID, we continue to drive really fast. The frequency increased, the quality of driving decreased,” he said, also pushing for an improvement in road infrastructure. 

The roundtable was followed by a Q&A session that touched on everything from much-desired regulation of e-bikes and riders who, according to one audience member, have “run amuck,” threatening public safety, and concerns about discrimination by insurance companies on the basis of age, income, credit score, and other markers.